The Ceridian-UCLA Pulse of Commerce Index (PCI), a real-time measure of the flow of goods to U.S. factories, retailers and consumers, rose 2.7 percent on a seasonally and workday adjusted basis in March, more than offsetting the 0.3 percent decline in January and the 1.5 percent decline in February. On a quarter-over-quarter basis, the PCI is up 3.9 percent at an annualized rate, a welcome acceleration from the relatively weak growth of the PCI experienced in the second half of 2010.
"The PCI growth of 3.9 percent for the first quarter of 2011 is a middle-of the-road number, signaling that we are not in either one of the extremes. In other words, the recession is over, but we are not yet experiencing a robust recovery," said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. "This means that for the coming quarter, the PCI is expecting GDP growth close to historically normal levels of around 3 percent and normal increases in payroll jobs at approximately 150,000 per month. The unemployment rate is likely to hold stubbornly to its current level but could be driven down by discouraged workers dropping out of the labor force."
"We are more optimistic than last month, but are still targeting GDP growth of 3 percent for the first quarter of 2011, which remains at the low end of the range of expectations," continued Leamer. "The outlook remains consistent with the PCI's view of the fundamental health of the U.S. economy over the past four months."
Over time, the PCI has shown a substantial correlation with industrial production. Last month, the PCI correctly suggested industrial production for February would come in flat to slightly down at .02 percent. The strong March PCI suggests a 0.8-percent gain in industrial production for March when that data are released by the Federal Reserve on April 15.
"March represents the sixteenth consecutive month of year-over-year growth in the index," explained Craig Manson, senior vice president and index expert for Ceridian. "This is particularly encouraging because the first six months of last year were strong, and the index posted solid growth despite the difficult year-over-year comparison. Continuation of this trend is welcome news, because like the overall economy, the PCI has been growing since it first turned positive in December of 2009."
The complete March report, with regional analysis, is available at www.ceridianindex.com.
